FX.co ★ Technical analysis of GBP/USD for July 05, 2023

The GBP/USD pair rallied in Asian trade to a high of around the spot of 1.2703 ahead of the European open thanks in part to a softer US Dollar. The pair does appear to be struggling to reach last week's highs around 1.2750 as rangebound trade has been a constant theme.

The U.S. dollar edged higher in early European hours Wednesday as weak Chinese activity data hit risk sentiment ahead of the release of minutes from the Federal Reserve's latest meeting.

On the one-hour chart, the GBP/USD pair continues moving in a bullish trend from the support levels of 1.2703 and 1.2650.

Currently, the price is in a bullish channel. This is confirmed by the RSI indicator signaling that we are still in a bullish trending market.

As the price is still above the moving average (100), immediate support is seen at 1.2688, which coincides with a golden ratio (38.2% of Fibonacci).

The GBP/USD pair appears to have found an anchor around 1.2688, which likely signals some reluctance for markets to take the pair sustainably above the benchmark 1.2688 level, given uncertainty about the Fed's tightening peak, but still mirroring the support offered by the very hawkish ECB messaging.

Consequently, the first support is set at the level of 1.2688. So, the market is likely to show signs of a bullish trend around the spot of 1.2688/1.2703. In other words, buy orders are recommended above the golden ratio (1.2749) with the first target at the level of 1.2790.

Key level has alreadt set at the point of 1.2703, hence; GBP/USD fell 0.15% to 1.2703, ahead of U.K. services PMI data for July, while USD/JPY rose 0.18% to 144.69, still trading below the 140 level that spurred intervention by Japanese authorities last autumn.

Furthermore, if the trend is able to breakout through the first resistance level of 1.2790. We should see the pair climbing towards the double top (1.2847) to test it.

It would also be wise to consider placing a stop loss; This is set below the second support at 1.2590.